What does the ownership structure of Drive Shack Inc. (NYSE: DS) look like?

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Drive Shack Inc.’s (NYSE:DS) large shareholder groups have power over the company. Institutions often own shares in larger companies, and we expect to see insiders owning a noticeable percentage of smaller ones. I like to see at least a little insider ownership. As Charlie Munger said “Show me the incentive and I’ll show you the result”.

Drive Shack is not a big company by world standards. It has a market cap of US$128 million, which means it wouldn’t get the attention of many institutional investors. In the chart below, we can see that institutional investors have bought the company. We can zoom in on the different ownership groups, to learn more about Drive Shack.

NYSE: Breakdown of DS shareholding February 8, 2022

What does institutional ownership tell us about Drive Shack?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it is included in a major index. We would expect most companies to have some institutions listed, especially if they are growing.

We can see that Drive Shack has institutional investors; and they own a good part of the shares of the company. This suggests some credibility with professional investors. But we cannot rely solely on this fact since institutions sometimes make bad investments, like everyone else. It is not uncommon to see a sharp decline in the stock price if two large institutional investors attempt to sell a stock at the same time. So it’s worth checking Drive Shack’s past revenue trajectory (below). Of course, keep in mind that there are other factors to consider as well.

earnings-and-revenue-growth
NYSE: DS Earnings and Revenue Growth February 8, 2022

Institutional investors own more than 50% of the company, so together they can probably heavily influence board decisions. We note that hedge funds have no significant investment in Drive Shack. The company’s largest shareholder is Wesley Edens, with a 10% stake. With 6.2% and 6.1% of the shares outstanding, respectively, BlackRock, Inc. and T. Rowe Price Group, Inc. are the second and third largest shareholders.

After digging a little deeper, we found that the top 17 held combined ownership of 50% of the company, suggesting that no single shareholder has significant control over the company.

Institutional ownership research is a good way to assess and filter the expected performance of a stock. The same can be obtained by studying the feelings of the analyst. There is a little analyst coverage of the stock, but not much. So there is room for him to gain coverage.

Drive Shack Insider Ownership

The definition of an insider may differ slightly from country to country, but board members still matter. The management of the company answers to the board of directors and the latter must represent the interests of the shareholders. In particular, sometimes the senior executives themselves sit on the board of directors.

I generally consider insider ownership to be a good thing. However, there are times when it is more difficult for other shareholders to hold the board accountable for decisions.

Our information suggests that insiders hold a significant stake in Drive Shack Inc. It has a market capitalization of just US$128 million, and insiders hold US$13 million of stock in their own name. This may suggest that the founders still own a lot of shares. You can click here to see if they bought or sold.

General public property

The general public, who are usually individual investors, hold a 37% stake in Drive Shack. Although this group may not necessarily make the decisions, they can certainly have a real influence on the way the business is run.

Next steps:

I find it very interesting to see who exactly owns a business. But to really get insight, we also need to consider other information. To do this, you need to find out about the 4 warning signs we spotted some with Drive Shack (including 2 that made us uncomfortable).

If you’re like me, you might want to ask yourself if this business will grow or shrink. Luckily, you can check out this free report showing analyst predictions for its future.

NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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